Exclusive: Charter, Comcast in renewed talks on Time Warner Cable bid

A cable truck returns to a Time Warner Cable office in San Diego, California

By Soyoung Kim and Liana B. Baker

NEW YORK (Reuters) - Charter Communications Inc reached out to Comcast Corp this week about teaming up to buy Time Warner Cable Inc, after the larger rival rejected its $37.3 billion takeover bid, according to people familiar with the matter.

Charter approached Comcast on Wednesday to discuss carving up the second-largest U.S. cable company's systems and subscribers, the people said, asking not to be named because they were not authorized to speak with the media.

Charter, the No. 4 U.S. cable provider, and Comcast, the top U.S. cable provider, are in preliminary discussions about how to structure a potential alliance, the people said. One possibility is that Charter buys all of Time Warner Cable and sells off some of its markets and subscribers to Comcast, one of the people said.

It was not immediately clear which geographic markets are under discussion, but analysts have said that Comcast would be interested in Time Warner Cable's largest markets such as New York, Los Angeles and Dallas.

The two companies held similar discussions late last year but those talks did not progress at that time.

Comcast, Time Warner Cable and Charter declined to comment.

A successful tie-up would take out Comcast from the bidding for Time Warner Cable. Comcast, which has also evaluated a takeover bid for all of Time Warner Cable, was seen as the only likely suitor besides Charter.

Analysts have said any attempt to merge the two largest cable operators, however, would face tough scrutiny from U.S. regulators.

Securing backing from Comcast could also allow Charter, with a market capitalization of around $14 billion, to pay more for Time Warner Cable, which has a much larger market value of $38 billion.

Charter, backed by billionaire John Malone's Liberty Media Corp, formally announced its $132.50 per share bid for Time Warner Cable on Monday, which the larger rival promptly rejected as too low.

Time Warner Cable instead made a counter proposal worth $160 per share, including $100 in cash and the rest in stock. A number of large Time Warner Cable shareholders would support a deal with Charter if the company sweetens its bid to $145 to $150 per share, Reuters reported earlier on Wednesday.

Charter has said the combined company may have to do "swaps and divestitures" of cable systems to serve regions more efficiently, according to its investor presentation on Wednesday.

Comcast is not interested in doing swaps, but is seeking to buy systems, one of the people said.

(Reporting by Soyoung Kim and Liana Baker in New York; Editing by Leslie Adler and Richard Chang)